Sports betting is sweeping the nation. It fills the media and is winning legislative battles in state after state. It has generated millions of gamblers and dozens of new companies serving the market. And it has all been in a little less than four years. It is the most incredible phenomenon in the history of legal gambling in the United States.

The story of sports betting is a multifaceted story; it includes the gamblers, professional sports leagues, national media, major gaming companies, sports-only gaming companies, taxes, wagering, promotions, and the revenue. The noisiest part of the narrative might be the wagers — the handle — although sports talk programming comes close. The handle numbers can be very large and eye catching; they attract the attention of government officials, lawmakers and media outlets. In January 2022, $9 billion was bet on sporting events in the USA. The majority of those wagers were made remotely. It is an unparalleled phenomenon.

New York is fast becoming the poster child for mobile betting. New York authorized mobile sports betting beginning on January 8, 2022.
Retail sports betting has been legal since July of 2019, and each of the state’s four casinos has a sports book; in the first two months of 2022, those books took approximately $36 million in wagers with a win of less than $1 million. Not much to write home about. Contrast that, if you will with the mobile wagering activity.

In the first 51 days of legalized mobile sports betting in the Empire State, $3.197 billion was wagered remotely.  It took New Jersey 39 months to reach $1 billion in handle in a month. Nevada did not achieve that benchmark until October 2021 after decades of retail-only sports betting. Illinois is the only other state to approximate the billion-dollar barrier with nearly $900 million in January. Illinois may surpass that benchmark soon: the state’s requirement for in-person registration ended this month. When Iowa made that change its handle increased by 50 percent. Our poster, New York, allows remote registration.

The states with retail-only sports wagering such as Mississippi, Maryland and Louisiana have yet to surpass $100 million in wagers in a month. When new states enter the sports gambling arena, they are likely to be with a mobile option. In fact, Louisiana has already revisited the issue; mobile betting became legal in January and revenue doubled. When the Supreme Court ruled the federal law prohibiting sports betting was illegal in May 2018 it opened a floodgate. Suddenly betting on sports became not only acceptable, but a national pastime. But without the overwhelming success of mobile wagering the spread of sports betting and the attendant media hoopla, it would have been a much tamer phenomenon.

The total amount bet is the handle; the money that makes its way into economic system is the win. Since 2018 the win has averaged 7.3 percent of total bets. A reasonable win percentage, about the same as from a slot machine. From the win the operator has to pay its expenses and taxes before any money reaches the bottom line. It sounds easier than it is proving to be. The mobile win in New York for January and February was $206 million. Of that amount the state took $100 million in taxes and the operators spent $40 million in promotions and advertising. That does not leave much for the bottom line and the remaining $60 million is split among seven operators. No one is getting rich.

The New York tax rate is the highest; in other states there is slightly more money to go around. Or there would be if the competition was not so fierce. Seven mobile bookmakers operated during that time in New York; three dominated the market.  FanDuel and Caesars Sportsbook each had approximately a 33 percent market share, and DraftKings took in about 25 percent of the wagers. Those three operators control approximately the same percentage of the market in every state with mobile wagering.  In every state where they compete against each other by offering bonuses those bonuses often exceed the theoretical win.

If that were not enough, the major sports betting operators spends tens of millions of dollars in each jurisdiction on advertising, all in search of new players. When announcing their quarterly results each of those companies have said the situation is temporary and unsustainable. In the future the companies promise to report that most elusive of all economic measures, profit. There are billions of dollars wagered, millions of dollars in win and taxes, but very little remains to slide down to the bottom line for the bookmakers. All that glitters is not gold.